Comprehensive Analysis of the Business Environment of Facebook Inc.

This report provides a comprehensive analysis of Facebook Inc.'s business environment. It begins with an overview of Facebook and its market position, followed by a detailed PESTLE analysis, examining the political, economic, social, technological, legal, and environmental factors affecting the company. The report then applies Porter's Five Forces to assess the competitive landscape and analyzes Facebook's internal environment, including its core competencies, resources, and capabilities. A SWOT analysis is also included to identify Facebook's strengths, weaknesses, opportunities, and threats. The analysis considers the impact of various macro and micro environmental factors on Facebook's performance and operations, providing insights into the company's strategic positioning within the social media market.

Analysis of Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
Overview of Facebook Inc. .............................................................................................................3
1. PESTLE Analysis .......................................................................................................................4
2. Porter Five Force Analysis for Facebook Inc. ............................................................................7
3. Analysis of the internal environment of Facebook Inc................................................................8
4. SWOT Analysis ........................................................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES .............................................................................................................................14

INTRODUCTION
Analysing a business and the various factors affecting it is very much important for the
entrepreneurs in order to survive or sustain in a market. This report is in context to Facebook, a
highly popular and profitable name currently in the global market of social media. Facebook Inc.
was established in the month of February 2004 by Mark Zuckerberg, headquartered at Menlo
Park, Califorbnia.It is a leading social media platform in the current market, holding millions of
satisfied online users. The report will identify macro and micro environmental factors affecting
Facebook performance and operations. The report will include application of different
approaches and analysing tools such as PESTLE, SWOT etc. Furthermore, the report will
identify core competencies, resources and capabilities developed by Facebook to lead the social
media market.
Overview of Facebook Inc.
Facebook Inc. was established by Mark Zuckerberg in the year 2004, It became the
largest social networking media in the world. A Market research of 2014 identified that more that
2 billion people are using Facebook. Facebook Inc. offers various software development
programming application and tools to the developers in order to achieve better interface for the
end user in mobile application and web application. Facebook Inc. has one popular e-commerce
website – www.facebook.com and application for smartphones such as symbian, IOS, Android
etc. Both the application and website of mobile allows users in connecting them with their family
and friends all around the world. Furthermore, Facebook Inc. website allows its users to share
own photos, thoughts, tag photos to friends, send friendship request etc. For faster process and
message developers of Facebook Inc. developed Facebook messenger that is available for
Android, instagram and IOS. Facebook allows users to transfer media such as photos, music,
videos more than 20% faster compared to the chat box in mobile application or website of
Facebook. There are numerous elements or components in the full scale condition which greatly
affects the capacities and exercises performed by an association or business. These variables
have both negative and positive effect on the business tasks inside an association; for example,
Facebook Inc.

1. PESTLE Analysis
There are various macro factors which have a great impact on the Facebook Inc., in order
to identify these macro factors PESTLE analysis can be used as following-
 Political factors affecting Facebook Inc. - Facebook's business or functions is related
with the political landscape. In this factor of the Pestle analysis the impact of government
as external factors' in the organisation's remote or macro-environment are described. The
legislature assumes a vital part on the business tasks inside an association. The political
figures, for example, change arrangements because of fluctuating government greatly
affects the organisations and their capacities(Zalengera and et.al, 2014). It is vital to think
about the political variables while arranging the business methodologies and actualizing
them(Major political factors that influence Facebook Inc. are as mentioned below -
1. Popular governmental support for globalisation – Opportunity
2. Political stability within developed countries or nations – Opportunity
3. Political barriers in the Chinese market – Threat
Political stability of developed nations offers opportunities for Facebook Inc. to continue
expanding its business in these markets. The company also has the chance to grow its social
media and display advertising service all around the world on the basis of governmental support
related to globalisation. However, Facebook may suffer from political barriers in china, its
potential important growth is limited due to the Chinese censorship.
 Economic factors essential for Facebook Inc. - Economic conditions assist in shaping
Facebook Inc.'s business development and growth. Different nations have different
contrasts in their financial conditions. The financial states of a nation highly affect the
business tasks on the associations. For instance – solid economy increment the buying
power among individuals while a feeble economy lessens it which negatively affects the
offers of organisations (Abbott, 2015). The economics element of the Pestle analysis
considers the effect of economic changes and conditions on the organisation's remote or
macro-environment. The economic external factors that affect Facebook Inc. are as
described below -
1. Rapid economic growth of developing nations – Opportunity
2. Increasing stability of developing nations – Opportunity
3. Increment in disposable income – Opportunity

Facebook Inc. has an opportunity to enhance their market penetration efforts in developing
nations with growing stability in economy. Relatively, the rapid growth in economy of these
countries leads to an improvement of infrastructure, including telecommunication
infrastructure(Islam and Mamun, 2017). This factor also support Facebook in expansion of
access to its social media services and social networking websites. In addition to this, the
increasing disposable income within developing countries helps in improving user’s capacity to
buy computing devices that could support in accessing services offered by Facebook and it also
contributes to the organisation's growth or expansion.
 Social factors affecting Facebook's Business environment – Facebook's global reach and
popularity is influenced by the social conditions. The social factors, for example,
inclinations or taste of the general population or users. The users inclinations is critical
and basic to consider for an association, for example, Facebook Inc.. The quantity of
offers relies upon the factor that the users are tolerating and fulfilled by the item offered
by an association or organisation. The effect of social or sociocultural changes and trends
on the company's macro-environment or company's remote is described in this element of
the Pestle analysis. Some social factors affecting Facebook the most are as mentioned
below -
1. Increasing online purchase – Opportunity
2. Increasing preferences for premium quality services – Opportunity
3. Increasing support for corporate social responsibility – Opportunity
The improving living conditions and increasing financial capacity encourage people to demand
high quality services. This social situation or condition develops and opportunity foe Facebook
Inc, to improve its service quality standards in order to satisfy and retain customers who pay for
the advertising services to the company(Bohari and et.al, 2017). Additionally, enhancing online
buying behaviour all around the world develop opportunities for Facebook to create additional
services to generate profit form retail sales through related mobile application and social
networking websites. Facebook Inc. also has an opportunity to improve its corporate social
responsibility programs in order to satisfy corresponding expectations of users.
 Technological Factors affecting Facebook – Facebook is a company which was
developed on online technologies considering this there are various technological factors
that affects the Facebook business. The mechanical advancement is likewise a central

point that impact the business activities and capacities. The appropriation of new and
inventive innovation can help with expanding the efficiency of an association which
prompts increment in benefit and accomplishment of objectives or goal. The Facebook
Inc. centre around actualizing the utilization of present day innovation with a specific end
goal to offer successful items and administrations to the customers. The major
technological element affecting Facebook are mentioned as below -
1. Increasing number of online social media organisations – Threat
2. Diversification of online retain companies – Threat
3. Increasing mobile devices – Opportunity
Facebook has an opportunity to improve user experience in utilising mobile applications. This
opportunity is essential, due to the trend of increasing mobile device usage across the world.
Facebook faces threat of growing competition because many online social media companies are
getting established and attracting users away from Facebook's services in social media. The
diversification of online retail businesses also threatens to compete with Facebook Inc.
 Ecological factors – The social media business of Facebook is linked to the natural
environment, The natural factors, for example, atmosphere, patterns and so forth greatly
affects the different business exercises or tasks. The Facebook Inc. centre around
performing natural well disposed business activities with a specific end goal to build up a
solid and safe condition. The association consider condition as a critical factor while
arranging, creating and actualizing business capacities or exercises. The various
environmental or ecological factors affecting Facebook are as mentioned below -
1. Climatic changes – Threat and opportunity
2. Increasing complexity of waste disposal standards – Opportunity
3. Increasing emphasis on business sustainability – Opportunity
Facebook Inc. has an opportunity to increase sustainability condition of its social media business
in order to satisfy concerns with regards to the natural environment. Additionally, the company
can adopt effective disposal standard and policies for its corporate activities. These efforts can
assist in controlling the increasing issue of waste disposal standards. Facebook al;so have major
threat related to the climate, due to change in climate Facebook can require shifting its server or
equipments to some other location anytime in the future.

 Legal Factors – Laws and legal requirements milts on Facebook's Business, these factors
of Pestle analysis determine the impact of legal regulations and systems on a business.
The legal factor incorporates different laws and controls composed and forced by the
legislature on the business tasks performed by the associations. The legitimate experts
build up specific laws with respect to the business exercises that are essential to be trailed
by every last sort of organisations or association to manage and maintain a strategic
distance from lawful outcomes(Li and et.al, 2016). The Facebook Inc. viably takes after
the enactments keeping in mind the end goal to remain clean and make an inspirational
position in the market. The various legal factors affecting Facebook Inc. are as described
below -
1. Increasing regulatory support for free Wi-Fi – Opportunity
2. Developing patent laws around the world – Opportunity
3. Internet regulation in China – Opportunity and Threat
Facebook has an opportunity to develop and introduce new products in the global social media
market, while expecting improvement of legal protection based on improved patent laws around
the globe. Additionally, Facebook Inc. may get benefits form increasing coverage of free WiFi
by growing its social media reach in various areas in the world. The company faces issues form
its ban in china but it has an opportunity to negotiate with the Chinese government and adjust its
services to obtain access to the country's online social networking market.
All the above components are incorporated into large scale condition and highly affects
the business capacities or activity of every single association. The Macro condition factors are
the not responsible for the administration or association. These are wild components which
adversely or decidedly influences the business and its capacities. With a specific end goal to
maintain and accomplish a decent position in the market or industry Facebook Inc. needs to
guarantee that they oversee and handle them adequately to decrease the negative impact of every
one of these elements on their business tasks.
2. Porter Five Force Analysis for Facebook Inc.
In order to identify the major stakeholders for Facebook Inc. within the global social
media market or industry Porter five forces analysis can be applied as following - Bargaining Power of Customers – The Advertiser and users are potential customers of
Facebook, most of the customers of Facebook demands privacy for their profile or

account(Sutherland,2014). S-1 filling privacy strategy implication allowed Facebook to
maintain securities and exchange in the IPO. This strategy helped Facebook in increasing
18% percent revenue and 69 percent customers effectively and easily. Customers using
social media platform are concerned with the privacy of their account or profile as it
contains important information about user or owner of the account.
 Bargaining Power suppliers – S-1 filling strategy reduces different factors form there
suppliers for example losing of users experience based on location and inability in
entering new countries. For example – Facebook Inc. currently developed their
organisation in India. Though, because of certain privacy issues many users shifted to
Google plus services form Facebook(Dobbs, 2014). Threats of New Entrants – Facebook faces issues or challenges from new entrants site
path. The market review of 2012 presented that more than 2 million users shifted to Path
from Facebook. Path offer low threat and multi user experience. However, Path has
limited access from IOS and Android. Threats of substitute Products – Facebook faced major issues or challenges from various
messaging substitute products for example Hike, Whatsapp, iMessage, Line, WeChat etc.
This type of messaging application allows users in internet based messaging from their
phone-book. In addition to this Hangout function of Google plus is attracting many users
recently as it is based on multi-function such as video calling, text messaging over mobile
as well as computer(Ogutu and Mathooko, 2015).
 Competitive Rivalry – Twitter, Google plus, WhatsApp, LinkedIn gives a tough
competition to Facebook in social media industry. Mark Zuckerberg sated that Facebook
lose around 40% revenue growth due to entrance of new competitors in the social media
environment or market.
3. Analysis of the internal environment of Facebook Inc.
In order to identify the various internal factors that affect the performance and
functioning of Facebook Inc. it’s important to determine the resources, core competencies,
capabilities and core skills.
Resources
 Finance – The most important resource required by Facebook Inc. includes a huge
amount of investment or finance as due to increase in competition or rivalry, Facebook

need to alter its user interface and other changes in the various mobile application or
software. These changes require a lot of investment or finance. Facebook is a highly
profitable social media company but it faces issues while competing with big names such
as Amazon, YouTube etc. Therefore, financial resources are very essential for Facebook
Inc.
 Human resource –The cited company hires the most talented and skilled employees to
perform various functions in the business. Facebook has a very effective recruitment
system which focus on identifying the most deserving or suitable candidate in the
company. Human resources are important for each and every organisation as without a
skilled workforce, no business can achieve success in the market.
 Technological resources – Facebook Inc. focus on investing for the most useful elements
that can help to achieve its goals or objective and assist the company to be a leader in the
social media market or industry. The company uses the latest technologies in their
business activities for offering the best user interface to their customers and compete with
other social media networking companies in the global market (Bull and et.al., 2016).
 Infrastructure – Facebook is established by effective organisational framework with each
and every department working potentially in order to develop better services related to
social media networking. A developed infrastructure plays an important role in
achievement of organisational goals and objective among other competitors in the social
media industry.

Core – Competencies
 Facebook has various core-competencies which help it sustain its leading position in the
social media market worldwide. The company has a highly skilled and developed IT
support which help them to innovative new options as well as facilities to the user related
to social media networking. Along with a strong IT supports Facebook has a highly
developed technolgy.
 The company has also developed an effective and strong customer relation worldwide
which assist in surviving within a competitive market.
 Facebook Inc. uses the latest technologies in their business in order to provide satisfying
social media networking services to the users. This is another core-competency for

Facebook; technological development is the most essential element playing vital role in
development of a social media networking company.
 Wide reach – Facebook was established in the year 2004, currently it is covering almost
every country in the world with millions of users increasing day by day. This assists
Facebook to attract more users to start using its services; the wide reach and popularity is
helping Facebook to continue its development and growth in the social media
networking.
Capabilities
 Provides effective marketing opportunities to other organisation – Facebook helps
many organisations or businesses to display their advertisement to a huge audience or
users on Facebook. The organisations get support from Facebook Inc. in marketing or
promoting their products or services to large numbers of users globally.
 Live- video –Facebook Inc. offers various new features to the users such as the live
video which helps users to share their Live actions to their friends or family instantly
using Facebook messenger and other mobile application (Bakshy and et.al., 2015).
 Click-bait may engage a lot of clicks, but Facebook research determines that 80% of
the time, people prefers headlines that are more enlightening. Since it express at how
long people spend reading articles compared to the ratio of people discussing and
sharing it, individual better off posting informative headlines very important to the
content, so those interested readers who click are likely to engage with the content.
Facebook also identifies phrases that are commonly used in click-bait headlines to
determine which posts are click-bait and the domains they come from. Links shared
from those pages or domains will appear lower in the news feed as long as they
continue to use click-bait headlines.
Core skills
 Facebook have real quality in its high combination with sites advertisement applications.
It has in excess of a billion dynamic month to month clients and it comprehends the
genuine needs and needs of the clients. It has magnificent client encounter through which
it serves the most quick and incredible administrations on the web-based social
networking. One of the real quality of Facebook is that it is one lord of web-based social
networking stage where it has the most elevated clients as contrast with different

contenders (Sentiment analysis in Facebook and its application to e-learning, 2014) It
conveys differing scope of offices and administrations on the web-based social
networking through which clients can undoubtedly trade data and keep secure it. Because
of expanding the utilisation of Mobile telephone, Facebook application utilize is
consistently expanded in the present time through which Facebook have picked up the
most elevated income as contrast with different rivals in the realm of web-based social
networking. Facebook is the biggest surveillance based enterprise which has mankind
history in the world of internet. It has major two core competencies that are capability to
develop network people over internet and design mots crucial innovative services for its
customers. It always focuses on the actual needs of the customer and serves them
something innovative.

4. SWOT Analysis
The SWOT Analysis approach can be used in order to identify Strengths, Weaknesses,
Opportunities and Threats. SWOT investigation is alluded as recognising interior ecological
components for business activities of Facebook Inc (Newton and et.al., 2014). Be that as it may,
diverse thoughts are produced for expanding quality, lessening shortcoming and getting open
doors for overcoming the happened issues. In such manner, SWOT investigation for breaking
down business execution of Facebook Inc. can be recognised as:
Strength
Facebook have major strength is its high integration with websites ad applications. It has
more than a billion active monthly users and it understands the actual needs and wants of the
customers. The cited organisation has excellent user experience through which it serves faster
and excellent services on the social media. One of the major strength of Facebook is that it is one
king of social media platform where it has the highest users as compared to other competitors. It
delivers diverse range of facilities and services on the social media through which users can
easily exchange information and keep secure it (Kerpen and et.al., 2015). Due to increasing use
of Mobile phone, Facebook application use is continuously increased in the present time through
which Facebook has gained the highest revenue as compared to other competitors in the world of
social media. Astounding items are the major solid purpose of Facebook Inc. Its image esteem is
high and has colossal assortment of items so they can serve the best to their users. This

organisation has exceptionally tremendous scope of brands and simply because of its wide range,
this organisation is developing step by step.
Weakness
Facebook has major weakness related to the poor development of advertisement and alot
it has lack of website customisation. It has been found by research that on the Facebook privacy
and security option is very weak due to which many fraud activities occurred on these websites.
Another weakness is that Facebook generates its revenue only by the advertisement. Its social
network lack of features as compare to other social media platform and it has weak protection of
the user's information. In spite of the fact that they have colossal assortment of item yet at the
same time, youths are not in any manner intrigued by them since they surmise that this
organisation is just for old matured individuals and their present showcasing methodology is
leaving terrible effect on new age. This organisation is as yet utilising old methods rather than
new strategies that are the reasons its items costs are expanding quickly (Krebs and et.al., 2017).
Opportunities
Facebook have opportunity to expand its business option in the china market and gain large
numbers of profitability and market share. It's another opportunity is to increase number of
people using Facebook by use of mobile devices. Mobile advertising is another opportunity for
Facebook by which it will generate additional revenue in its business. It's another opportunity is
to become the number one social media platform in the world and earn the maximum
profitability and revenue as compared to Google.
Threat
Facebook has major threat related to the tough competition as there are various other
social media platforms which is used by the users in the present time. In the present time, there is
continuously increasing the numbers of mobile internet users that is one of the major threat of the
Facebook and it has slow growth rate of online advertising. It has very weak business model
through which sometime, its business performance negatively influenced. Another threat is
related to the technological development as due to the technological innovation, several new
equipment, devices and software have been created in the present time which may influence the
choice and requirement of users. Thus, Facebook has threat to cope up with these changes of
technology and innovation. Facebook Inc. has the danger of losing its users in rivalry. Other
retail contenders are growing themselves in little market while Facebook Inc. is leading the